Panetta and Joint Chiefs of Staff Chairman Army Gen. Martin E. Dempsey testified on the request before the House Armed Services Committee, following their testimony yesterday before the Senate’s similar body.

Under the request, the Defense Department would spend $614 billion in fiscal 2013, with a $525.4 billion base budget and $88.5 in overseas contingency operations funds to cover war costs.

The secretary noted the request incorporates the Budget Control Act’s requirement for a $487 billion reduction in defense spending over the next 10 years. Meeting that reduction required department and service leaders to make some tough choices and determine acceptable risks, Panetta said. “There is very little margin for error in this budget,” he told the panel.

The Army and Marine Corps will shrink by 72,000 and 20,000 troops, respectively, by 2017, he noted, and all the services will slow or terminate some planned large purchases. Ground vehicles, unmanned aerial systems, ships and aircraft all will be affected, the secretary said.

Meanwhile, Panetta said, the department will invest in space, cyberspace, and long-range precision strike capabilities and continue to expand special operations forces. Highly capable, flexible combat capabilities are essential to confront and defeat multiple adversaries in light of force structure reductions, he added.

NATO and other partnerships also will be vital in future operations, he noted, and the department has committed funding to “smart defense” initiatives with NATO, including the organization’s first alliance-owned intelligence, surveillance and reconnaissance system.

Panetta responded to questions about the F-35 joint strike fighter, which he said will serve to further interoperability between U.S. and other nations’ militaries. He assured representatives that while the department has delayed some planned buys of the aircraft, it’s a key program for the United States and partner nations.

“The only way the United States remains the strongest military power in the world is to keep developing new-generation fighters that have the technologies and capabilities that we are going to need in the future,” he said.

And though the fighter’s three variants make it a complicated program, Panetta told the panel, the variants tailor the jet to Navy, Marine Corps and Air Force needs. His focus, he added, is working with industry to ensure final changes to the aircraft are cost-effective.

“The real challenge right now is to keep these costs under control as we resolve the final issues involved in this plane,” he said. “But I'm convinced we're going to be able to put that in place.”

The F-35 has “spectacular technology” in stealth and targeting capabilities, he said. The United Kingdom, Italy, the Netherlands, Australia, Canada, Denmark, Norway, Turkey, Israel and Singapore are partners or participants in the aircraft’s development program, and the Japanese government announced in December it will purchase 42 of the fighters.

“It's what we're going to need,” the secretary said. “And very frankly, the countries are all lined up waiting for this plane, because they know how good it's going to be. And that's why we've got to keep this on track.”

Panetta noted keeping a smaller force effective requires a strong National Guard and reserve force that can mobilize quickly, a robust industrial base capable of responding to urgent military equipment needs, and a core of highly trained active-duty troops.

“Far more than any weapon system or technology,” the military’s strength rests in men and women in uniform, he said. Keeping faith with troops is a guiding principal in the department, Panetta noted.

Budget cuts will not affect family assistance programs, basic benefits or pay, the secretary said, but he acknowledged that future adjustments are vital.

“Costs in military pay and benefits have to be on a sustainable course,” Panetta said. Personnel costs have grown by 90 percent over 10 years, he said, and must be controlled in the future “in ways that we believe are fair, transparent and consistent with our fundamental commitment to our people.”

Panetta urged the lawmakers to bear in mind the strategic trade-offs that are inherent in any particular budget decision as Congress considers the budget request.

“This is a zero-sum game, and as far as I know, there's no free money around,” he added. “And the need to balance competing strategic objectives has to take place in a resource-constrained environment.”

Dempsey said the request is a joint budget for a joint force, rather than individual service budgets formed without regard to shared issues.

“It achieves balance among force structure, modernization, pay and benefits,” the chairman said. “Changes that aren't informed by that context -- the context of jointness -- risk upending the balance that I just described and potentially compromising the force.”

One concern in shaping the future force, particularly when departing service members will enter a tough job market, is “the pace at which we separate people,” Dempsey said.

“We have any number of personnel policies, promotion rates, accession rates. We have evaluation reports, board processes,” he said. “[And] to the extent that we can use the existing processes to identify the highest performing personnel, keep them, encourage them, continue to develop them, we'll be in good shape.” But if troop-number cuts are accelerated, the chairman said, he can’t promise that will be the case.

“Then, we get into a position where we're forcing people out,” he said. “At that point, I won't be able to sit here and guarantee you that we're going to be keeping the right people.”

Cutting troop numbers responsibly means “finding the balance between, let's call it talent management, and then managing the personnel system to treat people with dignity and respect, but also reshape the force,” the general added.

The secretary said the defense department and other agencies have a responsibility to departing troops.

“We have got to do a better job of being able to take these young men and women that come out and give them the counseling, give them the education benefits … the jobs, give them the support systems that they absolutely have to have in order to be able to re-establish themselves in the communities,” he said.

High unemployment among recent veterans indicates a need for more support, the secretary added.